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Source: Bloomberg

Royal Dutch Shell Plc’s Nigerian venture lost the right to operate an oil site after a court ruled the company wasn’t entitled to renew a lease first granted in 1989.

On Monday, the court of appeals in Nigeria’s capital, Abuja, overturned a 2019 ruling that granted Shell Petroleum Development Co. the right to renew its operating license for the Oil Mineral Lease 11 field. Those rights will transfer to the state-owned Nigerian National Petroleum Corp.

“This is a huge victory for the government and people of Nigeria as we now have the impetus to responsibly unlock the oil and gas reserves the block offers for the benefit of all Nigerians,” Mele Kyari, managing director of NNPC, said in a statement.

Shell was “disappointed” by the judgment and subsequently filed an appeal, a spokesperson for the company said in a statement.

“Though we believe the SPDC JV has fulfilled its obligations under the Petroleum Act for the renewal of OML 11, our preference remains to engage the Nigerian authorities on available options for an amicable resolution of issues around the lease,” the spokesperson said.

The decision comes just as Shell agreed to pay a local community $111 million in a decades-old oil spill dispute related to OML 11. Shell faces lawsuits from Nigeria to Europe claiming environmental damages in the Niger Delta.

At the same time, the energy giant says it’s in the process of exiting its onshore oil position in Nigeria because that no longer is compatible with the company’s long-term climate strategy. Shell has pumped oil in Nigeria for half a century.

Kyari said further legal action by Shell would be “futile” given the company’s “inability to work on the Ogoni region of the block for over 30 years.”

An NNPC subsidiary already has taken over the assets, and operations “are in full gear,” according to its statement.

 -With assistance by William Clowes, and Ruth Olurounbi